Payments in a Digital World

Transcription

1 Payments in a Digital World October 2 nd,

2 The competitive ecosystem 2

3 A handful of tech firms and digital start-ups created commerce platforms, raising the bar on digital experiences and moving into payments Search Retail & Commerce Transportation Entertainment Lodging Apps Social 3

4 Many of these firms created services that further reduced start-up costs Plug + Play Infrastructure Tech Startup Costs Instantaneous Global Distribution 4

5 Fintechs exploded, offering slices of great experiences while fragmenting the landscape 5

6 We believe we re at the early stages of a rebundling as stand-alone services create friction for consumers Re-bundle and simplify 6

7 7

8 Payment Observations and Trends 8

9 mcommerce payments continue to grow as a percent of ecommerce Although friction and confusion exists in the eyes of consumers (mobile wallets) 5,000 Mobile experience and usability ratings surpass desktop for the first time 1,225 1,322 4, ,357 1,038 1,804 1,132 2,321 2,910 3,556 3,000 2,000 1,000 Billion USD ($) * 2019* 2020* 2021* 0 Mobile Commerce Other ecommerce 9 Source: Statista, emarketer, ForeSee

10 Payments are moving toward the moment of need, increasingly embedded in commerce But consumers are leery of losing control of their credentials as payments go frictionless 1 Source: Tech Crunch, Mercator Advisory Group 10

11 Customer acquisition and payment relationships are increasingly formed in context SMB integration is driving payment use cases SMB Bank Accounts ~7M active global drivers in 600 cities Many potential Uber drivers are unbanked, so Uber added an easy application process as part of driver onboarding. Has become one of the largest acquirers of SMB bank accounts. GoBank Instant Pay partnership provides drivers with ability to cash out immediately after completing a fare. As of 2018 Advance Payments Pre-payment to get drivers going before their first fare Uber takes a cut from drivers earning to get paid back. Car Leases + Financing Xchange Toyota partnership With Instant Pay Driving feels less like an actual job and more like a hobby. I drive more, especially if I really needed cash that day. Source: KPMG Analysis 11

12 Vaporization of paper, plastic and passwords Physical representations of products fade as consumers weigh risk versus convenience The biometric takeover Fingerprint Scanning Facial Recognition Voice Cash, Credit, Forms Account Opening Transactions Physical Identity Verification is now 15 20x riskier than a digitally led IDV process 12

13 The deal environment will remain robust, with primary drivers accounting for volumes Primary Drivers: Q2 18 sets new quarterly record for global VC-backed fintech deals & funding Add new capabilities across value chain Global P2P growing exponentially Extend physical footprint for POS Achieve vertical integration to software Enhance global reach to support business supply chains Capture new customer base, i.e. SMBs Bridge online and offline transactions Source: Statista, CB Insights, KPMG market analysis 13

14 Faster Payments are accelerating globally 35 countries have developed or are developing real time payment schemes India, 2004 United Kingdom, 2008 Singapore, 2014 US, 2017 Australia, 2018 Canada Immediate Payment Service (IMPS) In July, real time transactions represented almost half the value of debit and credit card swipes in retail stores Faster Payments Service (FPS) Corporate access increased to 250,000 with intent to increase to 1m for corporates Currently the fastest growing payments system in the UK Fast and Secure Transfers (FAST) Corporate access is not ubiquitous due to limit of $ 50k per transaction Singapore s focus is on innovating and becoming a cashless society Real time payments (RTP) 7 banks live (Q2 18) w ith s eve ral more onboarding in the coming months New Payments Platform (NPP) Launched 2/18 80% of transactions are P2P transactions with an average value of $120 NPP initial use case focused on splitting bills In progress Canada is in the second wave of infrastructure modernization initiatives 14

15 While other payment trends continue to evolve in each jurisdiction Canada High use of credit cards relative to other regions (rewards and convenience) Contemplating overlay services for RTP to enable payments innovation Fintechs partnering with incumbents China Giants such as Alibaba (Ant) and Wechat are driving significant transformation with everything embedded and rebundled around experiences (see video) United States Cash & checks in decline, but check usage is still high relative to other regions Low contactless adoption due to friction Fintechs partnering with incumbents and tech giants looming Singapore Cash is still king with most electronic payments begin stored value for local transportation Monetary Authority is standardizing QR codes and enabling fintechs to access FAST Brazil United Kingdom India Australia Slower tech uptake due to insufficient internet speeds and limited smartphone availability Greatest global adoption of contactless Highest global use of digital wallets Challenger Banks and PSD2 driving innovation and openness Fraud challenges led to demonetization Greater emphasis on digital payments, supported by high smart phone penetration Movement to enable and regulate fintechs Walmart s purchase of FlipKart to enable ecommerce marketplace (following China) High use of digital wallets, wearable payment devices and contactless cards Banks mandated to open up data in 2019 Digital only start-ups capitalizing on simplified banking license offered to support fintechs 15 Source: KPMG, Statista, Monetary Authority of Singapore, Reserve Bank of Australia, WorldPay, Wall Street Journal

16 The future is already here..wechat s impact on payments WeChat Video 16

17 Mitch Siegel KPMG, FS Strategy Leader kpmg.com/socialmedia The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International The KPMG name and logo are registered trademarks or trademarks of KPMG International.